Regulation

Ex-SEC Officials To Testify Against Agency

Published

3 months ago

September 16, 2024

Former high-ranking officials of the U.S. Securities and Exchange Commission (SEC) are set to testify in a congressional hearing against the agency. The SEC crypto hearing is titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets,” scheduled for September 18 at 10 a.m. EST.

Witnesses Revealed For SEC Crypto Hearing

The hearing is being organized by the House Financial Services Committee’s GOP leadership as part of an ongoing examination of the SEC’s regulatory oversight of crypto. Moreover, this hearing comes at a time of heightened scrutiny over the SEC’s actions under its current leadership. Among the witnesses slated to testify are Dan Gallagher, Chief Legal Officer at Robinhood Markets, and Michael Liftik, Partner at Quinn Emanuel Urquhart & Sullivan, LLP.

Both men have deep ties to the SEC. Gallagher served as an SEC Commissioner from 2011 to 2015. Meanwhile, Liftik was the Deputy Chief of Staff to former SEC Chair Mary Jo White and also worked as a staffer at the agency. Hence, their testimonies are expected to provide valuable insider perspectives on how the SEC operates and the potential missteps it has made in regulating digital assets under the leadership of current SEC Chair Gary Gensler.

The list of witnesses also includes Teddy Fusaro, President of Bitwise, and Jennifer Schulp, Director of Financial Regulation Studies at the Cato Institute’s Center for Monetary and Financial Alternatives. Furthermore, Lee Reiners, a lecturing fellow at Duke University, will testify against the American watchdog.

Their testimonies in the SEC crypto congressional hearing will likely explore the broader implications of the agency’s enforcement-heavy approach to cryptocurrency regulation. The hearing’s focus on the SEC’s “politicized” approach reflects growing dissatisfaction among Republican lawmakers who contend that Gensler’s administration has overreached in its regulatory efforts.

Gary Gensler Under Fire

The SEC has filed numerous enforcement actions against cryptocurrency companies for allegedly violating securities laws. These acts have drawn criticism from both industry insiders and members of Congress. Moreover, they argue that the agency has been regulating by enforcement rather than issuing clear guidelines.

Hence, Wednesday’s SEC crypto hearing could prove especially consequential given the backgrounds of two of its most prominent witnesses. Gallagher and Liftik are expected to shed light on internal SEC operations and provide firsthand accounts of the agency’s decision-making processes during their tenures.

In a parallel development, SEC Chair Gary Gensler is also facing a probe initiated by House Republicans over the agency’s hiring practices. There are allegations that the SEC may have factored political leanings into its recruitment decisions, potentially violating federal law.

The investigation raises concerns about the impartiality of the SEC’s hiring process and adds another layer of pressure on Gary Gensler’s leadership. Gensler is expected to testify on Capitol Hill later this month, though the exact date and whether other SEC commissioners will join him have yet to be finalized.